FBI: Hundreds of LIRR workers part of $1B fraud

Hundreds of Long Island Rail Road employees may have cheated their way to big pensions through a $1 billion fraud by paying off doctors to say they were unable to work, authorities said Thursday as they revealed that some supposedly disabled retirees were spotted regularly playing tennis and golf, shoveling heavy snow and working out for hours at a gym.

Eleven people, including two orthopedists and a former union official, have been charged with conspiracy in a decadelong fraud that authorities say poisoned the pension system used by employees of the nation’s largest commuter railroad.

Janice Fedarcyk, the head of New York’s FBI office, called it a “game where every retiree was a winner.” U.S. Attorney Preet Bharara said the disability pension program was not designed to be “a feeding trough for the truly dishonest,” but authorities say that’s what happened.

Hundreds of LIRR employees falsely declared themselves disabled to collect more pension money from the ages of 50 to 65, when they would otherwise qualify for full benefits, according to a criminal complaint filed in U.S. District Court in Manhattan.

The complaint said a retired engineering manager who complained of severe hand, knee, shoulder and back pain often played tennis and golf while collecting about $105,000 yearly in combined pension and disability payments.

Another former employee said she suffered neck, shoulder and hand pain from computer work and couldn’t stand more than five minutes without leg pain. She was “surveilled shoveling heavy snow for approximately one and a half hours,” the complaint said. She gets about $108,000 a year in combined pension and disability payments.

The complaint said many workers who retired with disability benefits worked unusually high amounts of overtime in the five years before retirement because pensions are calculated based on earnings during that period. The heavy workloads often continued “right up until the very day when they and their physicians claimed they were utterly unable to continue doing their railroad jobs,” the complaint said.

The complaint also seemed to place some of the blame for the scandal on the pension system itself, saying the “exceptionally high rate of occupational disability applications for the LIRR can be attributed to the fact that the LIRR, and the LIRR alone, offers a pension to employees as young as 50 years old.” The complaint said unscrupulous employees lie about their physical condition so they can retire at an earlier age with a salary almost equal to what they got when they were working.

Three doctors, one of whom has since died, were responsible for 86 percent of the railroad’s disability applications before 2008. One doctor recommended at least 839 LIRR employees for disability from 1998 to 2008, the complaint said.

Authorities said the doctors collected $800 to $1,200 in fees from each patient as they built disability cases by prescribing unnecessary medical tests and physical therapy. They said the doctors then fabricated or grossly exaggerated medical assessments and built illness narratives to show the employees were unable to work.

The criminal complaint was written by former FBI Agent Adam M. Suits, who is now a special agent with the Office of the Inspector General for the federal Railroad Retirement Board. He estimated that “the fraudulent scheme could cause the RRB to pay unwarranted occupational disability benefits exceeding $1 billion if disbursed in full.”

LIRR President Helena Williams has said the Railroad Retirement Board acted as a rubber stamp without consulting the railroad.

“The LIRR condemns any fraudulent activity associated with federal disability pension benefits,” Williams said, adding that the LIRR has cooperated with authorities and supports “efforts to root out fraud.”

What about the Billions and Trillion that the financial institutions on Wall street fleeced from the working men and women? Will we ever see a perp walk like this? Their fraud was in the TRILLIONS, yet no indictments or convictions. Keep chasing the nickels and dimes and we’ll never get to the real issues.

I don’t believe that upper management did not know about this. I am sure all these LIRR guys brag about this. We need to start looking at all these public pension systems. They should start first with the school districts. Everyone knows that all school district have 20-30 attorneys on staff just for the pension and health benefits with minimal or very little service. Furthermore, all of these other small municipal governments, libraries, water authorities, villages, towns, etc are abusing the system. How much longer can this go on? The system has to change. We need to elect politicians who will not turn their head to these fiscal abuses.